The carrying amounts of intangible assets at June 30, ~~2015~~2016 and September 30, ~~2014~~2015 were as follows:

June 30, 2015 September 30, 2014

Gross
Carrying
Amount(1) Accumulated
Amortization(1) Net
Carrying
Amount Gross
Carrying
Amount(1) Accumulated
Amortization(1) Net
Carrying
Amount Weighted-
Average
Amortization
Period (Years)
Intangible assets subject to amortization:

Trademarks/tradenames/patents
$ 5,530 $ (1,842 ) $ 3,688 $ 5,418 $ (1,480 ) $ 3,938 11
Customer relationships/distribution rights/ non-compete agreements
16,837 (9,217 ) 7,620 16,517 (7,390 ) 9,127 7
Developed software and technology
772 (772 ) — 772 (772 ) — 5

23,139 (11,831 ) 11,308 22,707 (9,642 ) 13,065
Intangible assets not subject to amortization:

Trademarks/tradenames/licenses
8,800 — 8,800 8,900 — 8,900

$ 31,939 $ (11,831 ) $ 20,108 $ 31,607 $ (9,642 ) $ 21,965

June 30, 2016 September 30, 2015 Weighted- Average Amortization Period (Years) Gross Carrying Amount (1) Accumulated Amortization (1) Net Carrying Amount Gross Carrying Amount (1) Accumulated Amortization (1) Net Carrying Amount Intangible assets subject to amortization: Trademarks/tradenames/licenses $ 13,923 $ (2,895 ) $ 11,028 $ 12,470 $ (1,966 ) $ 10,504 11 Customer relationships/non-compete agreements 23,867 (11,705 ) 12,162 16,836 (9,773 ) 7,063 7 Developed software and technology 772 (772 ) — 772 (772 ) — 5 38,562 (15,372 ) 23,190 30,078 (12,511 ) 17,567 Intangible assets not subject to amortization: Licenses — — — 38 — 38 $ 38,562 $ (15,372 ) $ 23,190 $ 30,116 $ (12,511 ) $ 17,605

(1)

Amounts include the impact of foreign currency translation adjustments.

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~~NUTRACEUTICAL INTERNATIONAL CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

~~5. GOODWILL AND INTANGIBLE ASSETS (Continued)~~

Estimated future amortization expense related to the June 30, ~~2015~~2016 net carrying amount of ~~$11,308~~$23,190 for intangible assets subject to amortization is as follows:

Year Ending September 30,
Estimated
Amortization
Expense
2015(1)
$ 679
2016
2,227
2017
1,852
2018
1,662
2019
1,235
Thereafter
3,653

$ 11,308

~~(1)~~: ~~Estimated amortization expense for the year ending September 30, 2015 includes only amortization to be recorded after June 30, 2015.~~



Year Ending September 30,	Estimated Amortization Expense
2016(1)	$	959
2017	3,588
2018	3,398
2019	2,970
2020	2,881
Thereafter	9,394
	$	23,190

(1) Estimated amortization expense for the year ending September 30, 2016 includes only amortization to be recorded after June 30, 2016.

General and economic conditions may ~~continue to~~ impact retail and consumer demand, as well as the market price of the Company's common stock, and could negatively impact the Company's future operating performance, cash flow and/or stock price and could result in ~~additional~~ goodwill and/or intangible asset impairment charges being recorded in future periods. Also, the Company periodically reviews its brands to achieve marketing, sales and operational synergies. These reviews could result in brands being consolidated or discontinued and could result in intangible asset impairment charges being recorded in future periods. ~~Such goodwill~~Goodwill and/or intangible asset impairment charges could materially impact the Company's consolidated financial statements. The valuation of goodwill and intangible assets is subject to a high degree of judgment, uncertainty and complexity.

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(dollars in thousands, except per share data)

6. DEBT

Debt was comprised of the following:

June 30,
2015 September 30,
2014
Long-term debt—revolving credit facility
$ 32,000 $ 43,000



	June 30, 2016		September 30, 2015
Long-term debt—revolving credit facility	$	46,000	$	31,500

The carrying value of the Company's debt approximates fair value at June 30, ~~2015~~2016 and September 30, ~~2014.~~2015. Estimated fair values for debt have been determined based on borrowing rates currently available to the Company for bank loans with similar terms and maturities and are classified as Level 2 (significant observable inputs other than quoted prices) in the FASB's fair value hierarchy.

On November 4, 2014, the Company amended its revolving credit facility (the "Credit Agreement"). The Credit Agreement extends the term of the credit facility to November 2019, increases the available credit borrowings to $100,000 with no automatic reductions and provides an accordion feature that can increase the available credit borrowings to $130,000, subject to approval by

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~~NUTRACEUTICAL INTERNATIONAL CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

~~6. DEBT (Continued)~~

the lenders and compliance with certain covenants and conditions. The lenders under the Credit Agreement continue to be Rabobank International and Wells Fargo. To date, the Company has not experienced any difficulties in accessing the available funds under the Credit Agreement. Deferred financing fees of $420 related to the Credit Agreement are being amortized over the term of the Credit Agreement.

At June 30, ~~2015,~~2016, the Company had outstanding revolving credit borrowings of ~~$32,000~~$46,000 under the Credit Agreement. Borrowings under the Credit Agreement are collateralized by substantially all assets of the Company. At the Company's election, borrowings bear interest at the applicable Eurodollar Rate plus a variable margin or at a Base Rate plus a variable margin. Base Rate is the higher of: (i) the Prime Lending Rate, (ii) the Federal Funds Rate plus 0.5% or (iii) the one-month Eurodollar Rate multiplied by the Statutory Reserve Rate plus 1.0% (capitalized terms are defined in the Credit Agreement, a copy of which was filed with the Securities and Exchange Commission on November 5, 2014). At June 30, ~~2015,~~2016, the applicable weighted-average interest rate for outstanding borrowings was ~~1.78%~~2.13%. The Company is also required to pay a variable quarterly fee on the unused balance under the Credit Agreement. At June 30, ~~2015,~~2016, the applicable rate was 0.25%. Accrued interest on Eurodollar Rate borrowings is payable based on elected intervals of one, two or three months. Accrued interest on Base Rate borrowings is payable quarterly. The Credit Agreement matures on November 4, 2019, and the Company is required to repay all principal and interest outstanding under the Credit Agreement on such date.

The Credit Agreement contains restrictive covenants, including limitations on incurring other indebtedness and requirements that the Company maintain certain financial ratios. As of June 30, ~~2015,~~2016, the Company was in compliance with the restrictive covenants. Upon the occurrence of a default, the lender has various remedies or rights, which may include proceeding against the collateral or requiring the Company to repay all amounts outstanding under the Credit Agreement.

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(dollars in thousands, except per share data)

7. SHARE PURCHASES

During the three and nine months ended June 30, 2016, the Company purchased 119,521 and 265,461 shares of common stock for an aggregate price of $2,862 and $6,428, respectively. During the three and nine months ended June 30, 2015, the Company purchased 63,276 and 180,301 shares of common stock for an aggregate price of $1,266 and $3,618, respectively. ~~During the three and nine months ended June 30, 2014, the Company purchased 99,541 and 156,661 shares of common stock for an aggregate price of $2,368 and $3,798, respectively.~~ All of these shares of common stock held in treasury were retired prior to June 30 in the respective quarter of purchase, except at June 30, ~~2015~~2016 and ~~2014,~~2015, the Company held ~~1,000~~6,211 and ~~9,673~~1,000 shares of common stock in ~~treasury, respectively.~~treasury. As of June 30, ~~2015,~~2016, the Company was permitted to purchase up to ~~551,723~~215,800 additional shares under its approved purchase plan, with no expiration date or restrictions. The Company accounts for treasury shares using the cost method.

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~~NUTRACEUTICAL INTERNATIONAL CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

8. STOCK OPTIONS AND OTHER EQUITY AWARDS

~~The following table summarizes stock option activity during the nine months ended~~

As of June 30, ~~2015:~~

Number of
Options Weighted-Average
Exercise
Price
Options outstanding and exercisable at September 30, 2014
32,500 $ 14.22
Exercised
(25,000 ) 14.22

Options outstanding and exercisable at June 30, 2015
7,500 14.22

~~All stock options~~2016, the Company had no outstanding ~~at June 30, 2015 expire on September 30, 2015.~~

No options to purchase shares of common stock, ~~for the three and nine months ended June 30, 2015 and 2014 were excluded from the computation of diluted earnings per share because none of the stock~~as all previously issued options were ~~anti-dilutive.~~

exercised or expired prior to September 30, 2015.

During the nine months ended June 30, 2015, the Company received proceeds of $356 related to the exercise of stock options. During this same period, the Company recorded a tax benefit of $55 and optionees realized an aggregate pre-tax gain of $141 from these stock option exercises. ~~During~~

No options to purchase shares of common stock for the three and nine months ended June 30, ~~2014,~~2015 were excluded from the ~~Company received proceeds~~computation of ~~$115 related to~~diluted earnings per share because none of the ~~exercise of~~ stock ~~options. During this same period, the Company recorded a tax benefit of $51 and optionees realized an aggregate pre-tax gain of $133 from these stock option exercises.~~

options were anti-dilutive.

On January 28, 2013, stockholders approved the Nutraceutical International Corporation 2013 Long-Term Equity Incentive Plan (the "2013 Plan") and the reservation of 800,000 shares of the Company's common stock for issuance under the 2013 Plan. Equity awards available under the 2013 Plan include stock options, stock appreciation rights and stock awards. In conjunction with the Company's fiscal ~~2014~~2015 and fiscal ~~2013~~2014 incentive compensation (bonus) payments, ~~24,827~~22,664 and ~~31,788~~24,827 shares of the Company's common stock were issued, respectively. These non-cash stock awards were granted on December 11, ~~2014~~2015 and December 11, ~~2013~~2014 at an aggregate fair value of ~~$504~~$556 and ~~$775,~~$504, respectively, with fair value being determined by the closing price of the Company's common stock on the grant date. These stock awards were registered, unrestricted and fully vested on the grant date. As of June 30, ~~2015, 743,385~~2016, 720,721 shares of the Company's common stock were available for issuance under the 2013 Plan.

9. SEGMENTS

Segment identification and selection is consistent with the management structure used by the Company's chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company's management structure and method of internal reporting, the Company has one operating segment. The Company's chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

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NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(Continued)~~

(unaudited)

(dollars in thousands, except per share data)

~~9. SEGMENTS (Continued)~~

Net sales attributed to customers in the United States and foreign countries for the three and nine months ended June 30, ~~2015~~2016 and ~~2014~~2015 were as follows:


	Three months ended June 30,				Nine months ended June 30,				Three Months Ended June 30,				Nine Months Ended June 30,
	2015		2014		2015		2014		2016		2015		2016		2015
United States	$	47,671	$	47,804	$	143,203	$	140,089	$	51,454	$	47,671	$	153,854	$	143,203
Foreign countries		6,711		7,821		19,627		21,945	9,382		6,711		22,433		19,627

	$	54,382	$	55,625	$	162,830	$	162,034	$	60,836	$	54,382	$	176,287	$	162,830

Certain net sales attributed to customers in the United States are sold to customers who in turn may sell such products to customers in foreign countries, while certain net sales attributed to customers in foreign countries are sold to customers who in turn may sell such products to customers in the United States.

The Company's net sales by product group for the three and nine months ended June 30, ~~2015~~2016 and ~~2014~~2015 were as follows:

Three months ended
June 30, Nine months ended
June 30,

2015 2014 2015 2014
Branded nutritional supplements and other natural products
$ 49,258 $ 50,161 $ 147,018 $ 146,636
Other(1)
5,124 5,464 15,812 15,398

$ 54,382 $ 55,625 $ 162,830 $ 162,034

~~(1)~~



	Three Months Ended June 30,				Nine Months Ended June 30,
	2016		2015		2016		2015
Branded nutritional supplements and other natural products	$	55,342	$	48,520	$	159,520	$	144,710
Other(1)	5,494		5,862		16,767		18,120
	$	60,836	$	54,382	$	176,287	$	162,830


(1)	Net sales for any other product or group of similar products are less than 10% of consolidated net sales.

In October 2015, the Company made a decision to classify certain net sales in the other product or group that were previously included in the branded nutritional supplements and other natural products group. As a result of ~~similar products are less than 10%~~this decision, the other product group net sales amount for the three and nine months ended June 30, 2015 has been increased by $738 and $2,308, respectively, from the prior year's presentation.

10. SUBSEQUENT EVENT

On July 26, 2016, the Company's Board of ~~consolidated net sales.~~Directors approved the addition of 1,000,000 shares to the Company's previously approved share purchase program. As of July 26, 2016, the Company was authorized to buy up to 1,183,170 total shares of its outstanding common stock.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis should be read in conjunction with the other sections of this report on Form 10-Q, including Part I, Item 1.

We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold primarily to and through domestic health and natural food stores. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers. Our core business strategy is to acquire, integrate and operate businesses in the natural products industry that manufacture, market and distribute branded nutritional supplements. We believe that the consolidation and integration of these acquired businesses provide ongoing financial synergies through increased scale and market penetration, as well as strengthened customer relationships.

We manufacture and sell nutritional supplements and other natural products under numerous brands, includingSolaray®,KAL®,Dynamic Health™, Nature's Life®,LifeTime®,Natural Balance®, NaturalCare®,Health from the Sun®,Pioneer®,Nutra ~~BioGenesis~~BioGenesis™™,Life-flo®,Organix South®,Heritage Store® andMonarch ~~Nutraceuticals~~Nutraceuticals™™.

We own neighborhood natural food markets, which operate under the trade namesThe Real Food ~~Company~~Company™™,Thom's Natural ~~Foods~~Foods™™,Cornucopia Community Market™ and~~Granola's~~Granola's™™. We also own health food stores, which operate under various trade names, includingFresh ~~Vitamins~~Vitamins™™ andPeachtree Natural Foods®.

We were formed in 1993 to effect a consolidation strategy in the fragmented vitamin, mineral, herbal and other nutritional supplements industry (the "VMS Industry"). Since our formation, we have completed numerous acquisitions of businesses in the VMS Industry. As a result of acquisitions, internal growth and cost management, we believe that we are well positioned to continue to capitalize on acquisition opportunities that arise in the VMS Industry.

Critical Accounting Policies

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America required us to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Significant estimates included values and lives assigned to acquired intangible assets, reserves for customer returns and allowances, uncollectible accounts receivable, valuation adjustments for slow-moving, obsolete and/or damaged inventory and valuation and recoverability of long-lived assets. Actual results may differ from these estimates. Our critical accounting policies include the following:

Accounts Receivable—Provision is made for estimated bad debts based on periodic analysis of individual customer balances, including an evaluation of days sales outstanding, payment history, recent payment trends and perceived creditworthiness. If general economic conditions and/or customer financial conditions were to change, additional provisions for bad debts may be required, which could have a material impact on the consolidated financial statements.

Inventories—Valuation adjustments are made for slow-moving, obsolete and/or damaged inventory based on a periodic analysis of individual inventory items, including an evaluation of historical usage and/or movement, age, expiration date and general condition. If market demand and/or consumer preferences are less favorable than historical trends or future expectations, additional valuation

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adjustments for slow-moving, obsolete and/or damaged inventory may be required, which could have a material impact on the consolidated financial statements.

Property, Plant and Equipment—Depreciation and amortization expense is impacted by our judgments regarding the estimated useful lives of assets placed in service. If the estimated lives of assets are significantly less than expected, depreciation and amortization expense would be accelerated, which could have a material impact on the consolidated financial statements.

We evaluate the recoverability of property, plant and equipment whenever events or circumstances indicate that the carrying amount of an asset group may not be recoverable. We measure recoverability of an asset group by comparison of its carrying amount to the future undiscounted cash flows the asset group is expected to generate. If an asset group is considered to be impaired, the difference between the carrying amount and the fair value of the impaired asset group is recognized as an impairment charge.

Goodwill and Intangible Assets—Goodwill and intangible assets require estimates and judgments in determining the initial recognition and measurement, including factors and assumptions used in determining fair values and useful lives. Intangible assets with finite useful lives are amortized ~~while intangible assets with indefinite useful lives are not amortized. Amortizable intangible assets~~and are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill ~~and indefinite-lived intangible assets are~~is tested annually for impairment and when events or changes in circumstances indicate the carrying value may not be recoverable. ~~The appropriateness of the indefinite-life classification of non-amortizable intangible assets is also reviewed as part of the annual testing or when circumstances warrant a change to a finite life.~~ We perform our annual impairment testing as of September 30 each year, which is the last day of our fiscal year.

A two-step process is used to test for goodwill impairment. The first step is to determine if there is an indication of impairment by comparing the estimated fair value of each reporting unit to its carrying value, including existing goodwill. Reporting unit fair values are estimated using market data as well as other factors. Goodwill is considered impaired if the carrying value of a reporting unit exceeds the estimated fair value. Upon an indication of impairment, a second step is performed to measure the amount of the impairment by comparing the implied fair value of the reporting unit's goodwill with its carrying value.

Intangible assets with indefinite useful lives are tested for impairment at the individual tradename level by comparing the fair value of the indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment charge is recognized. Fair values of indefinite-lived intangible assets are estimated using discounted cash flow models.

Amortizable intangible assets are reviewed for recoverability by comparing an asset group's carrying amount to the future undiscounted cash flows the asset group is expected to generate. If an asset group is considered to be impaired, the difference between the carrying amount and the fair value of the impaired asset group is recorded.

General and economic conditions may ~~continue to~~ impact retail and consumer demand, as well as the market price of our common stock, and could negatively impact our future operating performance, cash flow and/or stock price and could result in ~~additional~~ goodwill and/or intangible asset impairment charges being recorded in future periods. Also, we periodically review our brands to achieve marketing, sales and operational synergies. These reviews could result in ~~additional~~ brands being consolidated or discontinued and could result in ~~additional~~ intangible asset impairment charges being recorded in future periods. Such goodwill and/or intangible asset impairment charges could materially impact our consolidated financial statements. The valuation of goodwill and intangible assets is subject to a high degree of judgment, uncertainty and complexity.

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Revenue Recognition—Revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the product has been shipped and the customer takes ownership and assumes the risk of loss; (3) the selling price is fixed or determinable; and (4) collection of the resulting receivable is reasonably assured. We believe that these criteria are satisfied upon shipment from our facilities or, in the case of our neighborhood natural food markets and health food stores, at the point of sale within these stores. Revenue is reduced by provisions for estimated customer returns and allowances, which are based on historical averages that have not varied significantly for the periods presented, as well as specific known claims, if any. No other significant deductions from revenue must be estimated at the point in time that revenue is recognized.

Our estimates and judgments related to our critical accounting policies, including factors and assumptions considered in making these estimates and judgments, did not vary significantly for the periods presented and had no material impact on the consolidated financial statements as reported.

New Accounting Standards

See Note 1 to the Condensed Consolidated Financial Statements for information regarding new accounting standards.

Results of Operations

The following table sets forth certain Consolidated Statements of Comprehensive Income data as a percentage of net sales for the periods indicated:

Three Months
Ended June 30, Nine Months
Ended June 30,

2015 2014 2015 2014
Net sales
100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales
51.4 % 51.2 % 51.2 % 50.4 %

Gross profit
48.6 % 48.8 % 48.8 % 49.6 %
Selling, general and administrative
35.1 % 35.5 % 35.9 % 35.6 %
Amortization of intangible assets
1.3 % 1.3 % 1.3 % 1.2 %

Income from operations
12.2 % 12.0 % 11.6 % 12.8 %
Interest and other expense, net
0.4 % 0.6 % 0.5 % 0.6 %

Income before provision for income taxes
11.8 % 11.4 % 11.1 % 12.2 %
Provision for income taxes
3.6 % 4.2 % 3.8 % 4.5 %

Net income
8.2 % 7.2 % 7.3 % 7.7 %

Adjusted EBITDA(1)
18.1 % 17.3 % 17.6 % 18.0 %

Three Months Ended June 30, Nine Months Ended June 30, 2016 2015 2016 2015 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales 48.4 % 51.4 % 49.0 % 51.2 % Gross profit 51.6 % 48.6 % 51.0 % 48.8 % Selling, general and administrative 36.0 % 35.1 % 36.3 % 35.9 % Amortization of intangible assets 1.6 % 1.3 % 1.7 % 1.3 % Income from operations 14.0 % 12.2 % 13.0 % 11.6 % Interest and other expense, net 0.5 % 0.4 % 0.6 % 0.5 % Income before provision for income taxes 13.5 % 11.8 % 12.4 % 11.1 % Provision for income taxes 3.6 % 3.6 % 4.0 % 3.8 % Net income 9.9 % 8.2 % 8.4 % 7.3 % Adjusted EBITDA(1) 19.9 % 18.1 % 19.0 % 17.6 %

(1)

See "—Adjusted EBITDA."

Comparison of the Three Months Ended June 30, ~~2015~~2016 to the Three Months Ended June 30, ~~2014~~2015

Net Sales. Net sales ~~decreased~~increased by ~~$1.2~~$6.4 million, or ~~2.2%~~11.9%, to $60.8 million for the three months ended June 30, 2016 (the "third quarter of fiscal 2016") from $54.4 million for the three months ended June 30, 2015 (the "third quarter of fiscal 2015") ~~from $55.6 million for the three months ended June 30, 2014 (the "third quarter of fiscal 2014")~~. Net sales of branded nutritional supplements and other natural products decreased by $0.8 million, or 1.8%, to $49.3 million for the third quarter of fiscal 2015, compared to $50.1 million for the third quarter of fiscal 2014. The decrease in net sales of branded nutritional supplements and other natural products was primarily related to a decrease in sales volume of branded products to certain customers, partially offset by price increases of $1.9 million and, to a lesser extent, the net sales contributions of the fiscal 2014 and fiscal 2015 acquisitions. Other net

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~~sales were $5.1 million for the third quarter of fiscal 2015 and $5.5 million for the third quarter of fiscal 2014.~~

~~Gross Profit.~~ Gross profit decreased by $0.8 million, or 2.7%, to $26.4 million for the third quarter of fiscal 2015 from $27.2 million for the third quarter of fiscal 2014. This decrease in gross profit was primarily related to the decrease in net sales. As a percentage of net sales, gross profit was 48.6% for the third quarter of fiscal 2015 and 48.8% for the third quarter of fiscal 2014.

~~Selling, General and Administrative.~~ Selling, general and administrative expenses decreased by $0.7 million, or 3.5%, to $19.1 million for the third quarter of fiscal 2015 from $19.8 million for the third quarter of fiscal 2014. As a percentage of net sales, selling, general and administrative expenses decreased to 35.1% for the third quarter of fiscal 2015 from 35.5% for the third quarter of fiscal 2014. This decrease in selling, general and administrative expenses was primarily attributable to year-over-year cost improvements in many selling, general and administrative expense areas.

~~Amortization of Intangible Assets.~~ Amortization of intangible assets was $0.7 million for both the third quarter of fiscal 2015 and the third quarter of fiscal 2014. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

~~Interest and Other Expense, Net.~~ Net interest and other expense was $0.3 million for the third quarter of fiscal 2015 and $0.4 million for the third quarter of fiscal 2014 and primarily consisted of interest expense on indebtedness under our revolving credit facility.

~~Provision for Income Taxes.~~ Our effective tax rate was 30.3% for the third quarter of fiscal 2015 and 36.9% for the third quarter of fiscal 2014. The decrease in the effective tax rate was primarily related to a decrease in the valuation allowance for foreign tax credits of $0.3 million.

~~Comparison of the Nine Months Ended June 30, 2015 to the Nine Months Ended June 30, 2014~~

~~Net Sales.~~ ~~Net sales increased by $0.8 million, or 0.5%, to $162.8 million for the nine months ended June 30, 2015 from $162.0 million for the nine months ended June 30, 2014.~~ Net sales of branded nutritional supplements and other natural products increased by ~~$0.4~~$6.8 million, or ~~0.3%~~14.1%, to ~~$147.0~~$55.3 million for the ~~nine months ended June 30, 2015 from $146.6~~third quarter of fiscal 2016, compared to $48.5 million for the ~~nine months ended June 30, 2014.~~third quarter of fiscal 2015. The increase in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the fiscal ~~2014~~2015 and fiscal ~~2015~~2016 acquisitions and, to a lesser extent, price increases of ~~$2.7~~$0.9 million, partially offset by a slight decrease in sales volume of branded products to certain customers. Other net sales were ~~$15.8~~$5.5 million for the ~~nine months ended June 30, 2015~~third quarter of fiscal 2016 and ~~$15.4~~$5.9 million for the ~~nine months ended June 30, 2014.~~third quarter of fiscal 2015.

Gross Profit. Gross profit ~~decreased~~increased by ~~$0.9~~$5.0 million, or ~~1.0%~~18.9%, to ~~$79.5~~$31.4 million for the ~~nine months ended June 30, 2015~~third quarter of fiscal 2016 from ~~$80.4~~$26.4 million for the ~~nine months ended June 30, 2014.~~third quarter of fiscal 2015. As a percentage of net sales, gross profit ~~decreased~~increased to ~~48.8%~~51.6% for the ~~nine months ended June 30, 2015~~third quarter of fiscal 2016 from ~~49.6%~~48.6% for the ~~nine months ended June 30, 2014.~~third quarter of fiscal 2015. This ~~decrease~~increase in gross profit was primarily related to ~~an increase in manufacturing overhead costs, partially offset by~~ the increase in net ~~sales.~~sales and, to a lesser extent, a decrease in certain manufacturing overhead costs.

Selling, General and Administrative. Selling, general and administrative expenses increased by ~~$0.8~~$2.8 million, or ~~1.4%~~14.9%, to ~~$58.4~~$21.9 million for the ~~nine months ended June 30, 2015~~third quarter of fiscal 2016 from ~~$57.6~~$19.1 million for the ~~nine months ended June 30, 2014.~~third quarter of fiscal 2015. As a percentage of net sales, selling, general and administrative expenses increased to ~~35.9%~~36.0% for the ~~nine months ended June 30, 2015,~~third quarter of fiscal 2016, compared to ~~35.6%~~35.1% for the ~~nine months ended June 30, 2014.~~third quarter of fiscal 2015. This increase in selling, general and administrative expenses was primarily attributable to operational and transition costs related to the fiscal ~~2014~~2015 and fiscal 2016 acquisitions ~~partially offset by year-over-year cost improvements~~as well as an increase in ~~many selling, general and~~certain administrative ~~expense areas.~~costs.

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Amortization of Intangible Assets. Amortization of intangible assets was ~~$2.2~~$1.0 million for third quarter of fiscal 2016 and $0.7 million for the ~~nine months ended June 30, 2015 and $1.9 million for the nine months ended June 30, 2014.~~third quarter of fiscal 2015. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

Interest and Other Expense, Net. Net interest and other expense was ~~$0.8~~$0.3 million for both the ~~nine months ended June 30,~~third quarter of fiscal 2016 and fiscal 2015 ~~and $1.0 million for the nine months ended June 30, 2014~~ and primarily consisted of interest expense on indebtedness under our revolving credit facility.

Provision for Income Taxes. Our effective tax rate was ~~34.3%~~26.6% for the third quarter of fiscal 2016 and 30.3% for the third quarter of fiscal 2015. The decrease in the effective tax rate was primarily due to increases in the domestic manufacturing deduction and the credit for increasing research activities.

Comparison of the Nine Months Ended June 30, 2016 to the Nine Months Ended June 30, 2015

Net Sales. Net sales increased by $13.5 million, or 8.3%, to $176.3 million for the nine months ended June 30, 2016 from $162.8 million for the nine months ended June 30, 2015. Net sales of branded nutritional supplements and other natural products increased by $14.8 million, or 10.2%, to $159.5 million for the nine months ended June 30, 2016 from $144.7 million for the nine months ended June 30, 2015. The increase in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the fiscal 2015 and fiscal 2016 acquisitions and, to a lesser extent, price increases of $3.5 million, partially offset by a decrease in sales volume of branded products to certain customers. Other net sales were $16.8 million for the nine months ended June 30, 2016 and $18.1 million for the nine months ended June 30, 2015.

Gross Profit. Gross profit increased by $10.4 million, or 13.0%, to $89.9 million for the nine months ended June 30, 2016 from $79.5 million for the nine months ended June 30, 2015. As a percentage of net sales, gross profit increased to 51.0% for the nine months ended June 30, 2016 from 48.8% for the nine months ended June 30, 2015. This increase in gross profit was primarily related to the increase in net sales and, to a lesser extent, a decrease in certain manufacturing overhead costs.

Selling, General and Administrative. Selling, general and administrative expenses increased by $5.6 million, or 9.6%, to $64.0 million for the nine months ended June 30, 2016 from $58.4 million for the nine months ended June 30, 2015. This increase in selling, general and administrative expenses was primarily attributable to operational and transition costs related to the fiscal 2015 and fiscal 2016 acquisitions as well as an increase in certain administrative costs. As a percentage of net sales, selling, general and administrative expenses were 36.3% for the nine months ended June 30, 2016 and 35.9% for the nine months ended June 30, 2015.

Amortization of Intangible Assets. Amortization of intangible assets was $3.0 million for nine months ended June 30, 2016 and $2.2 million for the nine months ended June 30, 2015. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

Interest and Other Expense, Net. Net interest and other expense was $0.9 million for the nine months ended June 30, 2016 and $0.8 million for the nine months ended June 30, 2015 and ~~37.0%~~primarily consisted of interest expense on indebtedness under our revolving credit facility.

Provision for Income Taxes. Our effective tax rate was 32.2% for the nine months ended June 30, ~~2014.~~2016 and 34.3% for the nine months ended June 30, 2015. The decrease in the effective tax rate was primarily ~~related~~due to ~~a decrease~~increases in the ~~valuation allowance~~domestic manufacturing deduction and the credit for ~~foreign tax credits of $0.3 million.~~increasing research activities.

Adjusted EBITDA

Adjusted EBITDA (a non-GAAP measure) is defined in our performance measures as earnings before net interest and other expense, taxes, depreciation, amortization and goodwill and intangible asset impairments. Adjusted EBITDA has some inherent limitations in measuring operating performance due to the exclusion of certain financial elements such as depreciation and amortization and is not necessarily comparable to other similarly-titled captions of other companies due to potential inconsistencies in the method of calculation. Furthermore, Adjusted EBITDA is not intended to be a substitute for cash flows from operating activities, as a measure of liquidity, or an alternative to net income in determining our operating performance in accordance with generally accepted accounting principles. Our use of an EBITDA-based metric should be considered within the following context:

•

We acknowledge that plant and equipment (while less important in our line of business due to outsourcing alternatives) are necessary to earn revenue based on our current business model.

•

Our use of an EBITDA-based measure of operating performance is not based on any belief about the reasonableness of excluding depreciation and amortization when measuring financial performance.

•

Our use of an EBITDA-based measure is supported by its importance to the following key stakeholders:

•: ~~Analysts—who estimate our projected Adjusted EBITDA and other EBITDA-based metrics in their independently-developed financial models for investors;~~
•: ~~Creditors—who evaluate our operating performance based on compliance with certain EBITDA-based debt covenants;~~
•: ~~Investment Bankers—who use EBITDA-based metrics in their written evaluations and comparisons of companies within our industry; and~~
•: ~~Board of Directors and Executive Management~~—who use EBITDA-based metrics for evaluating management performance relative to our operating budget and bank covenant compliance, as well as our ability to service debt and raise capital for growth opportunities, including acquisitions, which are a critical component of our stated strategy. Generally, we have recorded a monthly accrual for incentive compensation as a percentage of Adjusted EBITDA, which has been paid out to executive management, as well as other employees, upon completion of our annual audit.

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▪
Analysts—who estimate our projected Adjusted EBITDA and other EBITDA-based metrics in their independently-developed financial models for investors;
▪
Creditors—who evaluate our operating performance based on compliance with certain EBITDA-based debt covenants;
▪
Investment Bankers—who use EBITDA-based metrics in their written evaluations and comparisons of companies within our industry; and
▪
Board of Directors and Executive Management—who use EBITDA-based metrics for evaluating management performance relative to our operating budget and bank covenant compliance, as well as our ability to service debt and raise capital for growth opportunities, including acquisitions, which are a critical component of our stated strategy. Generally, we have recorded a monthly accrual for incentive compensation as a percentage of Adjusted EBITDA, which has been paid out to executive management, as well as other employees, upon completion of our annual audit.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for each period included herein:

Three Months
Ended June 30, Nine Months Ended
June 30,

2015 2014 2015 2014

(dollars in thousands)

Net income
$ 4,450 $ 3,997 $ 11,897 $ 12,456
Provision for income taxes
1,930 2,333 6,220 7,329
Interest and other expense, net(1)
257 356 827 1,024
Depreciation and amortization
3,195 2,942 9,702 8,357

Adjusted EBITDA
$ 9,832 $ 9,628 $ 28,646 $ 29,166

~~(1)~~: ~~Includes amortization of deferred financing fees.~~



	Three Months Ended June 30,				Nine Months Ended June 30,
	2016		2015		2016		2015
	(dollars in thousands)
Net income	$	6,029	$	4,450	$	14,888	$	11,897
Provision for income taxes	2,182		1,930		7,063		6,220
Interest and other expense, net(1)	326		257		922		827
Depreciation and amortization	3,579		3,195		10,599		9,702
Adjusted EBITDA	$	12,116	$	9,832	$	33,472	$	28,646


(1)	Includes amortization of deferred financing fees.

Our Adjusted EBITDA increased to $12.1 million for the third quarter of fiscal 2016 from $9.8 million for the third quarter of fiscal ~~2015 from $9.6 million for the third quarter of fiscal 2014.~~2015. Adjusted EBITDA as a percentage of net sales increased to 19.9% for the third quarter of fiscal 2016 from 18.1% for the third quarter of fiscal ~~2015 from 17.3% for the third quarter of fiscal 2014.~~

2015.

Our Adjusted EBITDA ~~decreased~~increased to $33.5 million for the nine months ended June 30, 2016 from $28.6 million for the nine months ended June 30, ~~2015 from $29.2 million for the nine months ended June 30, 2014.~~2015. Adjusted EBITDA as a percentage of net sales ~~decreased~~increased to 19.0% for the nine months ended June 30, 2016 from 17.6% for the nine months ended June 30, ~~2015 from 18.0% for the nine months ended June 30, 2014.~~

2015.

Seasonality

We believe that our business is characterized by minor seasonality. However, sales to any particular customer or of any particular product can vary substantially from one quarter to the next based on such factors as industry trends, timing of promotional discounts, domestic and international economic conditions and acquisition-related activities. Excluding the effect of acquisitions, we have historically recorded higher branded ~~products~~product sales volume during the second fiscal quarter (January through March) due to increased interest in health-related products among consumers following the holiday season.

Liquidity and Capital Resources

We had working capital of ~~$62.4~~$71.5 million as of June 30, ~~2015,~~2016, compared to ~~$62.1~~$65.7 million as of September 30, ~~2014.~~2015. The increase in working capital was primarily the result of ~~an increase~~increases in ~~inventories~~accounts receivable and ~~a decrease in accrued expenses,~~inventories, partially offset by a decrease in cash.

Net cash provided by operating activities for the nine months ended June 30, ~~2015~~2016 was ~~$21.2~~$23.5 million, compared to ~~$16.1~~$21.2 million for the comparable period in fiscal ~~2014.~~2015. This increase in net cash provided by operating activities for the nine months ended June 30, ~~2015~~2016 was primarily attributable to an increase in net income as well as changes in operating assets and liabilities.

Net cash used in investing activities was ~~$7.8~~$32.6 million for the nine months ended June 30, ~~2015,~~2016, compared to ~~$24.8~~$7.8 million for the comparable period in fiscal ~~2014.~~2015. Our investing activities consisted of acquisitions of businesses and capital expenditures. The capital expenditures primarily related to buildings, building improvements, distribution and manufacturing equipment and information systems.

During the nine months ended June 30, 2016, we made two acquisitions of businesses. On October 6, 2015, we acquired certain operating assets of Dynamic Health Laboratories, Inc. On February 18, 2016, we acquired certain operating assets of Aubrey Organics, Inc. The aggregate purchase price of these acquisitions was $26.2 million in cash.

During the nine months ended June 30, 2015, we made two acquisitions of businesses. On November 18, 2014, we acquired certain operating assets of Agape Health Products. On June 4, 2015, we acquired certain operating assets of ProClay, LLC. The aggregate purchase price of these acquisitions was $1.3 million in cash.

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~~During~~Net cash provided by financing activities was $8.1 million for the nine months ended June 30, 2014, we made six acquisitions of businesses. On October 16, 2013, we acquired certain operating assets of TCCD International, Inc. On November 25, 2013, we acquired certain operating assets of Green Luxury Brands, Inc. On December 19, 2013, we acquired certain operating assets of Twinlab Corporation. On January 15, 2014, we acquired certain operating assets of Peachtree Natural Foods, Inc. On April 11, 2014, we acquired certain operating assets of Northwest Health Foods, Inc. On April 17, 2014, we acquired certain operating assets of Bio-Genesis Nutraceuticals, Inc. The aggregate purchase price of these acquisitions was $16.2 million in cash.

~~Net~~2016 and net cash used in financing activities was $14.6 million for the ~~nine months ended June 30, 2015 and net cash provided by financing activities was $5.4 million for the~~ comparable period in fiscal ~~2014.~~2015. During these periods, financing activities primarily related to borrowings and repayments under our revolving credit facility, payments of deferred financing fees, purchases of common stock for treasury and proceeds from the issuance of common stock related to stock option exercises and the direct stock purchase plan.

During the nine months ended June 30, 2016, net borrowings under our revolving credit facility were $14.5 million and primarily related to the acquisition of certain operating assets of Dynamic Health Laboratories, Inc. and Aubrey Organics, Inc.

In October 2007, we registered a direct stock purchase plan with the Securities and Exchange Commission. The purpose of this direct stock purchase plan is to provide a convenient way for existing stockholders, as well as new investors, to purchase shares of our common stock. A total of 1,500,000 shares of our common stock were registered under the plan, with ~~3,745~~2,479 shares purchased during the nine months ended June 30, ~~2015.~~2016. As of June 30, ~~2015,~~2016, there were ~~1,377,990~~1,374,965 shares of common stock available for purchase.

On November 4, 2014, we amended our revolving credit facility (the "Credit Agreement"). The Credit Agreement extends the term of the credit facility to November 2019, ~~resets~~increases the available credit borrowings to $100.0 million with no automatic reductions and provides an accordion feature that can increase the available credit borrowings to $130.0 million, subject to approval by the lenders and compliance with certain covenants and conditions. The lenders under the Credit Agreement continue to be Rabobank International and Wells Fargo. To date, we have not experienced any difficulties in accessing the available funds under the Credit Agreement. Deferred financing fees of $0.4 million related to the Credit Agreement are being amortized over the term of the Credit Agreement.

At June 30, ~~2015,~~2016, we had outstanding revolving credit borrowings of ~~$32.0~~$46.0 million under the Credit Agreement. Borrowings under the Credit Agreement are collateralized by substantially all of our assets. At our election, borrowings bear interest at the applicable Eurodollar Rate plus a variable margin or at a Base Rate plus a variable margin. Base Rate is the higher of: (i) the Prime Lending Rate, (ii) the Federal Funds Rate plus 0.5% or (iii) the one-month Eurodollar Rate multiplied by the Statutory Reserve Rate plus 1.0% (capitalized terms are defined in the Credit Agreement, a copy of which was filed with the Securities and Exchange Commission on November 5, 2014). At June 30, ~~2015,~~2016, the applicable weighted-average interest rate for outstanding borrowings was ~~1.78%~~2.13%. We are also required to pay a quarterly fee on the unused balance under the Credit Agreement. At June 30, ~~2015,~~2016, the applicable rate was 0.25%. Accrued interest on Eurodollar Rate borrowings is payable based on

elected intervals of one, two or three months. Accrued interest on base rate borrowings is payable quarterly. The Credit Agreement matures on November 4, 2019, and we are required to repay all principal and interest outstanding under the Credit Agreement on such date.

The Credit Agreement contains restrictive covenants, including limitations on incurring certain other indebtedness and requirements that we maintain certain financial ratios. As of June 30, ~~2015,~~2016, we were in compliance with the restrictive covenants. Upon the occurrence of a default, the lender has various remedies or rights, which may include proceeding against the collateral or requiring us to repay all amounts outstanding under the Credit Agreement.

A key component of our business strategy is to seek to make additional acquisitions, which may require that we obtain additional financing, which could include the incurrence of substantial additional

~~Table of Contents~~

indebtedness or the issuance of additional stock. We believe that borrowings under our current revolving credit facility or a replacement credit facility, together with cash flows from operations, will be sufficient to make required payments under the current credit facility or any such replacement facility, and to make anticipated capital expenditures and fund working capital needs for the next twelve months.

Contractual Obligations and Other Commitments

Our significant non-cancelable contractual obligations and other commitments as of June 30, ~~2015~~2016 were as follows:

Payments Due By Period
Contractual Obligations and Other Commitments
Total Less Than
1 Year 1 - 3 Years 4 - 5 Years After
5 Years

(dollars in thousands)

Revolving credit facility
$ 32,000 $ — $ — $ 32,000 $ —
Interest on revolving credit facility(a)
3,349 770 1,539 1,040 —
Operating leases
6,534 3,780 2,509 245 —

Total
$ 41,883 $ 4,550 $ 4,048 $ 33,285 $ —

~~(a)~~: Represents estimated interest obligations associated with our outstanding revolving credit facility balance of $32.0 million at June 30, 2015, assuming no principal payments are made before maturity, a weighted-average interest rate of 1.78% and an underutilization fee rate of 0.25%.



	Payments Due By Period
Contractual Obligations and Other Commitments	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		After 5 Years
	(dollars in thousands)
Revolving credit facility	$	46,000	$	—	$	—	$	46,000	$	—
Interest on revolving credit facility(a)	3,836		1,146		2,291		399		—
Operating leases	6,168		3,899		1,993		276		—
Total	$	56,004	$	5,045	$	4,284	$	46,675	$	—

(a) Represents estimated interest obligations associated with our outstanding revolving credit facility balance of $46.0 million at June 30, 2016, assuming no principal payments are made before maturity, a weighted-average interest rate of 2.13% and an underutilization fee rate of 0.25%.

Off-Balance Sheet Arrangements

Our operating lease commitments are disclosed in the Contractual Obligations and Other Commitments table above. As of June 30, ~~2015,~~2016, we had no other off-balance sheet arrangements that have had, or are reasonably likely to have, a material effect on our consolidated financial statements.

Inflation

Inflation affects the cost of raw materials, goods and services we use. In recent years, inflation has been modest. The competitive environment somewhat limits our ability to recover higher costs resulting from inflation by raising prices. We seek to mitigate the adverse effects of inflation primarily through improved productivity and cost containment programs. We do not believe that inflation has had a material impact on our results of operations for the periods presented, except with respect to increased costs in manufacturing, packaging and distribution resulting from increased fuel and other petrochemical costs, as well as payroll-related costs, insurance premiums and other costs arising from or related to government imposed regulations.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. These forward-looking statements can be identified by the use of terms such as "believe," "expects," "plan," "intend," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology,

or by discussions of strategy. These statements involve known and unknown risks, uncertainties and other factors that may cause industry trends or our actual results to be materially different from any future results expressed or implied by these statements. Important factors that may cause our results to differ from these forward-looking statements include, but are not limited to: (i) changes in or new government regulations or increased enforcement of the ~~same;~~same including adverse determinations by regulators; (ii) unavailability of desirable acquisitions, inability to complete them or inability to integrate

~~Table of Contents~~

them; (iii) increased costs, including from increased raw material or energy prices; (iv) changes in general worldwide economic or political conditions; (v) adverse publicity or negative consumer perception regarding nutritional supplements; (vi) issues with obtaining raw materials of adequate quality or quantity; (vii) litigation and claims, including product liability, intellectual property and other types; (viii) disruptions from or following acquisitions including the loss of customers; (ix) increased competition; (x) slow or negative growth in the nutritional supplement industry or the healthy foods channel; (xi) the loss of key personnel or the inability to manage our operations efficiently; (xii) problems with information management systems, manufacturing efficiencies and ~~operations;~~operations, including system interruptions and security/cybersecurity breaches; (xiii) insurance coverage issues; (xiv) the volatility of the stock market generally and of our stock specifically; (xv) increases in the cost of borrowings or unavailability of additional debt or equity capital, or both, or fluctuations in foreign currencies; and (xvi) interruption of business or negative impact on sales and earnings due to acts of God, acts of war, terrorism, bio-terrorism, civil unrest and other factors outside of our control.

We undertake no obligation to update or revise publicly any forward-looking statements to reflect new information, events or circumstances occurring after the date of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

At our election, borrowings bear interest at the applicable Eurodollar Rate plus a variable margin or at a Base Rate plus a variable margin. Base Rate is the higher of: (i) the Prime Lending Rate, (ii) the Federal Funds Rate plus 0.5% or (iii) the one-month Eurodollar Rate multiplied by the Statutory Reserve Rate plus 1.0%. At June 30, ~~2015,~~2016, the applicable weighted-average interest rate for borrowings was ~~1.78%~~2.13% and we had total borrowings outstanding of ~~$32.0~~$46.0 million. A hypothetical 100 basis point change in interest rates would not have had a material impact on our reported net income or cash flows for the nine months ended June 30, ~~2015~~2016 and ~~2014.~~

2015.

With respect to our international operations, we are subject to currency fluctuations; however, we do not believe that these fluctuations would have a material adverse impact on our financial position or results of operations because the majority of our net sales to foreign customers are transacted in U.S. dollars. Net sales to foreign customers not transacted in U.S. dollars include sales to customers in Barbados, Canada, Dominica, Japan, the Netherlands, Norway, St. Kitts, St. Lucia, St. Vincent, Sweden and the United Kingdom. To date, we have not hedged any of our potential foreign currency exposures.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision of and with the participation of our management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, ~~2015.~~2016. Based on

the foregoing, our principal executive and principal financial officers have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, ~~2015.~~

2016.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

As discussed in our other filings, we are subject to regulation by a number of federal, state and foreign agencies and are involved in various legal matters arising in the ordinary course of business.

We carry insurance coverage in the types and amounts that we consider reasonably adequate to cover the risks we face in the industry in which we compete.

In the opinion of management, the losses related to individual regulatory and legal matters in which we are presently involved are not probable and no estimate can be made of the range of potential gains or losses. While incapable of estimation, in the opinion of management, none of the regulatory and legal matters in which we are involved are individually expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, our aggregate liability arising from regulatory and legal proceedings related to these matters or future matters could have a material effect on our financial position, results of operations or cash flows.

~~Item��~~

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our ~~2014~~2015 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any unregistered equity securities during the quarterly period ended June 30, ~~2015.~~

2016.

Prior to fiscal ~~2015,~~2016, our Board of Directors approved a share purchase program authorizing us to buy up to 4,500,000 shares of our common stock. As of June 30, ~~2015,~~2016, there were ~~551,723~~215,800 shares available for purchase under this program. The shares available for purchase under this program have no expiration date. Purchases under this program during the three months ended June 30, ~~2015~~2016 occurred in April, May and June as follows:

Period
Total Number
of Shares
Purchased Average Price
Paid Per
Share Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plan Maximum
Number of
Shares that
May Yet Be
Purchased Under
the Plan
April 1 - 30, 2015
40,302 $ 19.83 40,302
May 1 - 31, 2015
21,874 20.09 21,874
June 1 - 30, 2015
1,100 24.74 1,100

63,276 20.00 63,276 551,723



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Number of Shares that May Yet Be Purchased Under the Plan
April 1-30, 2016	31,241	$	24.66	31,241
May 1-31, 2016	47,201	23.49		47,201
June 1-30, 2016	41,079	23.92		41,079
	119,521	23.94		119,521	215,800

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Item 6. Exhibits



	31.1		Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document(1)

101.SCH		XBRL Taxonomy Extension Schema Document(1)

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document(1)

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document(1)

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document(1)

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document(1)

~~(1)~~: ~~Filed herewith.~~


(1)	Filed herewith.

~~Table of Contents~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	NUTRACEUTICAL INTERNATIONAL CORPORATION (Registrant)
Date: July 28, 2016	By:		~~NUTRACEUTICAL INTERNATIONAL CORPORATION~~ ~~(Registrant)~~
~~Date: July 30, 2015~~		~~By:~~		/s/ CORY J. MCQUEEN
			Cory J. McQueen Vice President and Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)



Delaware (State of incorporation)		87-0515089 (IRS Employer Identification No.)

1400 Kearns Boulevard, 2nd Floor, Park City, Utah (Address of principal executive offices)		84060 (Zip code)

(435) 655-6106 (Registrant's telephone number, including area code)



Large accelerated filer o	Accelerated filer ýx	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o



					Description		~~Page No.~~
~~Part I.~~		~~Financial Information~~					Page
Part I .	Financial Information		3

		Item 1.		Financial Statements (unaudited)			3

		Condensed Consolidated Balance Sheets—June 30, ~~2015~~2016 and September 30, ~~2014~~ 2015			3

		Condensed Consolidated Statements of Comprehensive Income—Three Months and Nine Months Ended June 30, ~~2015~~2016 and ~~2014~~ 2015			4

		Condensed Consolidated Statements of Cash Flows—Nine Months Ended June 30, ~~2015~~2016 and ~~2014~~ 2015			5

		Notes to Condensed Consolidated Financial Statements			6

	Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations			14

	Item 3.		Quantitative and Qualitative Disclosures About Market Risk			2221

	Item 4.		Controls and Procedures			2221
~~Part II.~~		~~Other Information~~			23
Part II .	Other Information		23 ~~Item 1.~~		~~Legal Proceedings~~			23
		~~Item 1A.~~		~~Risk Factors~~			23
	Item 1.	Legal Proceedings	23

	Item 1A.	Risk Factors	23

	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			23

	Item 6.	Exhibits	24 ~~Exhibits~~			24

	June 30, 2015			September 30, 2014(1)

ASSETS
Current assets:
Cash	$	4,902		$	6,232
Accounts receivable, net		14,186			15,118
Inventories		59,318			57,914
Prepaid expenses and other current assets		2,774			3,364
Deferred income taxes		1,245			1,222

Total current assets		82,425			83,850
Property, plant and equipment, net		78,350			79,244
Goodwill		24,384			23,622
Intangible assets, net		20,108			21,965
Other non-current assets		1,692			1,203
Deferred income taxes, net		3,946			4,894

Total assets	$	210,905		$	214,778

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	14,218		$	14,874
Accrued expenses		5,852			6,835

Total current liabilities		20,070			21,709
Long-term debt		32,000			43,000
Other non-current liabilities		171			456

Total liabilities		52,241			65,165

Stockholders' equity:
Common stock		96			97
Additional paid-in capital		8,488			11,112
Retained earnings		150,244			138,347
Accumulated other comprehensive income		(139	)		79
Treasury stock		(25	)		(22	)

Total stockholders' equity		158,664			149,613

Total liabilities and stockholders' equity	$	210,905		$	214,778



	June 30, 2016			September 30, 2015 (1)
ASSETS
Current assets:
Cash	$	3,573		$	4,615
Accounts receivable, net	20,577			16,798
Inventories	63,945			59,440
Prepaid expenses and other current assets	3,413			4,195
Deferred income taxes	1,233			1,167
Total current assets	92,741			86,215

Property, plant and equipment, net	83,399			77,645
Goodwill	30,925			24,384
Intangible assets, net	23,190			17,605
Deferred income taxes	4,758			4,932
Other non-current assets	1,582			1,668
Total assets	$	236,595		$	212,449
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	14,098		$	14,023
Accrued expenses	7,117			6,505
Total current liabilities	21,215			20,528

Long-term debt	46,000			31,500
Other non-current liabilities	192			174
Total liabilities	67,407			52,202
Stockholders' equity:
Common stock	93			95
Additional paid-in capital	1,250			6,961
Retained earnings	168,506			153,618
Accumulated other comprehensive income	(514		)	(379		)
Treasury stock	(147		)	(48		)
Total stockholders' equity	169,188			160,247
Total liabilities and stockholders' equity	$	236,595		$	212,449


(1)	The condensed consolidated balance sheet as of September 30, 2015 has been prepared using information from the audited financial statements at that date.


	Three months ended June 30,				Nine months ended June 30,					Three Months Ended June 30,					Nine Months Ended June 30,
	2015		2014		2015			2014		2016			2015		2016			2015
Net sales	$	54,382	$	55,625	$	162,830		$	162,034	$	60,836		$	54,382	$	176,287		$	162,830
Cost of sales		27,955		28,473		83,293			81,660	29,416			27,955		86,430			83,293

Gross profit		26,427		27,152		79,537			80,374	31,420			26,427		89,857			79,537
Operating expenses
Selling, general and administrative		19,061		19,762		58,404			57,625	21,895			19,061		64,016			58,404
Amortization of intangible assets		729		704		2,189			1,940	988			729		2,968			2,189

Income from operations		6,637		6,686		18,944			20,809	8,537			6,637		22,873			18,944
Interest and other expense, net		257		356		827			1,024	326			257		922			827

Income before provision for income taxes		6,380		6,330		18,117			19,785	8,211			6,380		21,951			18,117
Provision for income taxes		1,930		2,333		6,220			7,329	2,182			1,930		7,063			6,220

Net income	$	4,450	$	3,997	$	11,897		$	12,456	$	6,029		$	4,450	$	14,888		$	11,897
Other comprehensive income (loss)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax		112		1		(218	)		49	(118		)	112		(135		)	(218		)

Comprehensive income	$	4,562	$	3,998	$	11,679		$	12,505	$	5,911		$	4,562	$	14,753		$	11,679

Net income per common share
Basic	$	0.47	$	0.41	$	1.24		$	1.27	$	0.65		$	0.47	$	1.59		$	1.24
Diluted		0.47		0.41		1.24			1.27	0.65			0.47		1.59			1.24
Weighted average common shares outstanding
Basic		9,561,008		9,798,393		9,612,171			9,826,516	9,310,097			9,561,008		9,390,765			9,612,171
Dilutive effect of stock options		2,991		8,400		4,920			9,150	—			2,991		—			4,920

Diluted		9,563,999		9,806,793		9,617,091			9,835,666	9,310,097			9,563,999		9,390,765			9,617,091


	June 30, 2015			September 30, 2014			June 30, 2016			September 30, 2015
Accounts receivable	$	15,259		$	16,352		$	21,608		$	17,882
Less allowances		(1,073	)		(1,234	)	(1,031		)	(1,084		)

	$	14,186		$	15,118		$	20,577		$	16,798

	June 30, 2015		September 30, 2014

Raw materials	$	22,485	$	20,559
Work-in-process		8,668		6,909
Finished goods		28,165		30,446

	$	59,318	$	57,914



	Fiscal 2016 Acquisition - Dynamic Health		Fiscal 2016 Acquisition - Aubrey Organics		Fiscal 2015 Acquisitions
Assets acquired:
Current assets	$	3,821	$	755	$	111
Property, plant and equipment	644		6,004		—
Goodwill	6,541		—		762
Intangible assets	8,020		450		393
	$	19,026	$	7,209	$	1,266

	Fiscal 2015 Acquisitions		Fiscal 2014 Acquisitions

Aggregate assets acquired:
Current assets	$	111	$	2,733
Goodwill		762		7,675
Intangible assets		393		5,803

	$	1,266	$	16,211



	Three Months Ended June 30, 2015		Nine Months Ended June 30, 2015
Net sales	$	58,708	$	176,299
Net income	$	4,392	$	11,972

	Goodwill		Accumulated Impairment			Net

Balance as of October 1, 2014	$	64,016	$	(40,394	)	$	23,622
Goodwill attributable to fiscal 2015 acquisition		762		—			762

Balance as of June 30, 2015		64,778		(40,394	)		24,384



	Goodwill		Accumulated Impairment			Net
Balance as of September 30, 2015	$	64,778	$	(40,394	)	$	24,384
Goodwill attributable to fiscal 2016 acquisitions	6,541		—			6,541
Balance as of June 30, 2016	$	71,319	$	(40,394	)	$	30,925

	June 30, 2015							September 30, 2014

	Gross Carrying Amount(1)		Accumulated Amortization(1)			Net Carrying Amount		Gross Carrying Amount(1)		Accumulated Amortization(1)			Net Carrying Amount		Weighted- Average Amortization Period (Years)
Intangible assets subject to amortization:
Trademarks/tradenames/patents	$	5,530	$	(1,842	)	$	3,688	$	5,418	$	(1,480	)	$	3,938		11
Customer relationships/distribution rights/ non-compete agreements		16,837		(9,217	)		7,620		16,517		(7,390	)		9,127		7
Developed software and technology		772		(772	)		—		772		(772	)		—		5

		23,139		(11,831	)		11,308		22,707		(9,642	)		13,065
Intangible assets not subject to amortization:
Trademarks/tradenames/licenses		8,800		—			8,800		8,900		—			8,900

	$	31,939	$	(11,831	)	$	20,108	$	31,607	$	(9,642	)	$	21,965



	June 30, 2016							September 30, 2015							Weighted- Average Amortization Period (Years)
	Gross Carrying Amount (1)		Accumulated Amortization (1)			Net Carrying Amount		Gross Carrying Amount (1)		Accumulated Amortization (1)			Net Carrying Amount		Weighted- Average Amortization Period (Years)
Intangible assets subject to amortization:
Trademarks/tradenames/licenses	$	13,923	$	(2,895	)	$	11,028	$	12,470	$	(1,966	)	$	10,504	11
Customer relationships/non-compete agreements	23,867		(11,705		)	12,162		16,836		(9,773		)	7,063		7
Developed software and technology	772		(772		)	—		772		(772		)	—		5
	38,562		(15,372		)	23,190		30,078		(12,511		)	17,567
Intangible assets not subject to amortization:
Licenses	—		—			—		38		—			38
	$	38,562	$	(15,372	)	$	23,190	$	30,116	$	(12,511	)	$	17,605

Year Ending September 30,	Estimated Amortization Expense

2015(1)	$	679
2016		2,227
2017		1,852
2018		1,662
2019		1,235
Thereafter		3,653

	$	11,308


(1)	Estimated amortization expense for the year ending September 30, 2016 includes only amortization to be recorded after June 30, 2016.

			Weighted-Average Exercise Price

Options outstanding and exercisable at September 30, 2014	32,500		$	14.22
Exercised	(25,000	)		14.22

Options outstanding and exercisable at June 30, 2015	7,500			14.22


▪	Analysts—who estimate our projected Adjusted EBITDA and other EBITDA-based metrics in their independently-developed financial models for investors;


▪	Creditors—who evaluate our operating performance based on compliance with certain EBITDA-based debt covenants;


▪	Investment Bankers—who use EBITDA-based metrics in their written evaluations and comparisons of companies within our industry; and


(a)	Represents estimated interest obligations associated with our outstanding revolving credit facility balance of $46.0 million at June 30, 2016, assuming no principal payments are made before maturity, a weighted-average interest rate of 2.13% and an underutilization fee rate of 0.25%.

Period		Average Price Paid Per Share

April 1 - 30, 2015	40,302	$	19.83	40,302
May 1 - 31, 2015	21,874		20.09	21,874
June 1 - 30, 2015	1,100		24.74	1,100

	63,276		20.00	63,276	551,723